COSCO Paciﬁc Limited 中遠太平洋有限公司

8/14/2019 COSCO Pacific Limited

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COSCO Pacific Limited

(Incorporated in Bermuda with limited liability)

()

Stock Code : 1199

Interim Report 2009


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Contents INTERIM RESULTSUnaudited Condensed Consolidated Balance SheetUnaudited Condensed Consolidated Income Statement

Unaudited Condensed Consolidated Statement of Comprehensive Income

Unaudited Condensed Consolidated Statement of Changes in Equity

Unaudited Condensed Consolidated Cash Flow Statement

Notes to the Unaudited Condensed Consolidated Interim Financial Information

REPORT ON REVIEW OF INTERIM FINANCIAL INFORMATION

INTERIM DIVIDEND

CLOSURE OF REGISTER OF MEMBERS

MANAGEMENT DISCUSSION AND ANALYSIS

Financial Review

Financial Analysis

Financial Position

Event after the Balance Sheet Date

Business Review

SHARE OPTIONS

DIRECTORS INTERESTS IN SHARES, UNDERLYING SHARES AND DEBENTURES

SUBSTANTIAL INTERESTS IN THE SHARE CAPITAL OF THE COMPANY

CHANGES IN DIRECTORS BIOGRAPHICAL DETAILS

DISCLOSURE UNDER RULE 13.22 OF CHAPTER 13 OF THE LISTING RULES

CORPORATE GOVERNANCE

BOARD COMMITTEES

MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS

PURCHASE, SALE OR REDEMPTION OF LISTED SHARES

INVESTOR RELATIONS

CORPORATE CULTURE

PROSPECTS

MEMBERS OF THE BOARD

0203

05

06

07

08

09

30

31

31

31

31

32

35

37

37

45

46

50

51

51

52

52

52

52

53

53

54

54


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Unaudited Condensed Consolidated Balance SheetAs at 30th June 2009

COSCO Pacific Limited Interim Report 2009 03

As at

30th June

2009

As at

31st December

2008

Note US$000 US$000

ASSETS

Non-current assets

Property, plant and equipment 4 1,666,817 1,627,590

Investment properties 3,614 1,679

Leasehold land and land use rights 60,705 60,660

Intangible assets 4,756 4,688

Jointly controlled entities 668,550 642,149Loans to jointly controlled entities 87,250 123,904

Associates 698,145 708,508

Loans to associates 30,663 23,835

Available-for-sale financial assets 303,000 323,000

Finance lease receivables 1,544 2,000

Deferred income tax assets 1,251 1,204

Derivative financial instruments 5 16,135 24,215

Other non-current assets 6 75,679

3,618,109 3,543,432

Current assetsInventories 4,107 5,376

Trade and other receivables 7 304,115 232,265

Current income tax recoverable 1,015 975

Available-for-sale financial assets 20,581 2,119

Restricted bank deposits 8 77,435

Cash and cash equivalents 8 418,126 351,606

747,944 669,776

Total assets 4,366,053 4,213,208


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As at 30th June 2009

04

Unaudited Condensed Consolidated Balance Sheet(Continued)

As at

30th June

2009

As at

31st December

2008

Note US$000 US$000

EQUITY

Capital and reserves attributable to the equity holders

of the Company

Share capital 9 28,792 28,792

Reserves 2,539,216 2,492,047

Proposed final dividend 31,026

Interim dividend declared 41,802

2,609,810 2,551,865

Minority interests 112,562 94,438

Total equity 2,722,372 2,646,303

LIABILITIES

Non-current liabilities

Deferred income tax liabilities 16,145 12,776

Long term borrowings 10 1,351,942 1,356,955

Other long term liabilities 1,789 2,922

1,369,876 1,372,653

Current liabilities

Trade and other payables 11 157,582 123,531

Current income tax liabilities 3,319 3,341

Current portion of long term borrowings 10 71,188 56,406

Short term bank loans 10 41,716 10,974

273,805 194,252

Total liabilities 1,643,681 1,566,905

Total equity and liabilities 4,366,053 4,213,208

Net current assets 474,139 475,524

Total assets less current liabilities 4,092,248 4,018,956

The accompanying notes on pages 9 to 29 are an integral part of these unaudited condensed consolidated interim

financial information.


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Unaudited Condensed Consolidated Income StatementFor the six months ended 30th June 2009


Six months ended 30th June

2009 2008

Note US$000 US$000

Revenue 159,028 162,065

Cost of sales (86,019) (77,676)

Gross profit 73,009 84,389

Investment income 12,925 13,081

Administrative expenses (28,480) (24,970)

Other operating income 6,262 17,756

Other operating expenses(6,164)

(2,709)

Operating profit 12 57,552 87,547

Finance income 13 3,136 2,280

Finance costs 13 (22,997) (24,778)

Operating profit after finance income and costs 37,691 65,049

Share of profits less losses of

jointly controlled entities 42,634 59,723

associates 27,898 37,822

Profit on disposal of a jointly controlled entity 14 5,516

Profit before income tax 113,739 162,594

Income tax expenses 15 (7,608) (5,983)

Profit for the period 106,131 156,611

Profit attributable to:

Equity holders of the Company 104,509 153,152


106,131 156,611

Interim dividend 16 41,802 78,890

Earnings per share for profit attributable to equity holders

of the Company

basic 17 US4.66 cents US6.82 cents

diluted 17 US4.66 cents US6.81 cents




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06

Unaudited Condensed Consolidated Statement of Comprehensive IncomeFor the six months ended 30th June 2009


2009 2008

US$000 US$000

Profit for the period 106,131 156,611

Other comprehensive income

Exchange differences arising on translation of financial statements of foreign

subsidiaries, jointly controlled entities and associates 5,146 86,333

Net fair value loss on available-for-sale financial assets (7,093) (37,968)

Release of reserve upon disposal of an available-for-sale financial asset(85)

(2,044)

Fair value adjustment upon transfer from property,

plant and equipment to investment properties 294

Share of reserves of jointly controlled entities and associates

revaluation reserve (13,609) (10,584)

hedging reserve (326) 345

other reserves 233 (26,049)

Other comprehensive (loss)/income for the period (15,440) 10,033

Total comprehensive income for the period 90,691 166,644

Total comprehensive income attributable to:

Equity holders of the Company 88,971 158,594


90,691 166,644




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Unaudited Condensed Consolidated Statement of Changes in EquityFor the six months ended 30th June 2009

Capital and

reserves

attributable

to the equity

holders of the

Company

Minority

interests Total

US$000 US$000 US$000

Total equity at 1st January 2009 2,551,865 94,438 2,646,303

Total comprehensive income for the period 88,971 1,720 90,691

Capital contribution from a minority shareholder of a subsidiary 21,461 21,461

Dividends paid to

equity holders of the Company (31,026) (31,026)

minority shareholders of subsidiaries (5,057) (5,057)

57,945 18,124 76,069

Total equity at 30th June 2009 2,609,810 112,562 2,722,372

Total equity at 1st January 2008 2,712,393 62,266 2,774,659

Total comprehensive income for the period 158,594 8,050 166,644

Issue of shares on exercise of share options 207 207

Acquisition of a business 9,980 9,980

Dividends paid to

equity holders of the Company (139,686) (139,686)

minority shareholders of subsidiaries (4,310) (4,310)

19,115 13,720 32,835

Total equity at 30th June 2008 2,731,508 75,986 2,807,494




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Unaudited Condensed Consolidated Cash Flow StatementFor the six months ended 30th June 2009

08


2009 2008

US$000 US$000

Net cash generated from operating activities 86,165 131,000

Net cash used in investing activities (56,579) (551,311)

Net cash generated from financing activities 37,418 223,778

Net increase/(decrease) in cash and cash equivalents 67,004 (196,533)

Cash and cash equivalents at 1st January 351,606 386,867

Effect of foreign exchange rate changes (484) 559

Cash and cash equivalents at 30th June 418,126 190,893

Analysis of balances of cash and cash equivalents:

Time deposits 200,692 85,683

Bank balances and cash 217,434 105,210

418,126 190,893




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Notes to the Unaudited Condensed ConsolidatedInterim Financial Information


1. GENERAL INFORMATION

COSCO Pacific Limited (the Company) and its subsidiaries (collectively the Group) are principally engaged in the

businesses of managing and operating container terminals, container leasing, management and sale, container

manufacturing, logistics, and their related businesses. The Company is a limited liability company incorporated in

Bermuda and its registered office is Clarendon House, Church Street, Hamilton, HM 11, Bermuda.

The intermediate holding company of the Company is China COSCO Holdings Company Limited (China COSCO),

a company established in the Peoples Republic of China (the PRC) with its H-Shares and A-Shares listed on the

Main Board of The Stock Exchange of Hong Kong Limited and the Shanghai Stock Exchange respectively. The parent

company of China COSCO is China Ocean Shipping (Group) Company (COSCO), a state-owned enterprise

established in the PRC.

The unaudited condensed consolidated interim financial information of the Group for the six months ended 30th

June 2009 (the Unaudited Condensed Consolidated Interim Financial Information) has been approved for issue by

the Board on 27th August 2009.

2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES

The Unaudited Condensed Consolidated Interim Financial Information has been prepared in accordance with Hong

Kong Accounting Standard (HKAS) 34 Interim Financial Reporting issued by the HKICPA.

The Unaudited Condensed Consolidated Interim Financial Information should be read in conjunction with the annual

audited consolidated financial statements for the year ended 31st December 2008 (the 2008 Annual Financial

Statements), which have been prepared in accordance with the Hong Kong Financial Reporting Standards

(HKFRS) issued by the HKICPA.

Adoption of new HKFRSs

The accounting policies and methods of computation used in the preparation of the Unaudited Condensed

Consolidated Interim Financial Information are consistent with those used in the 2008 Annual Financial Statements,

except that the Group has adopted the following new and revised standards and amendments to existing standards

(collectively the new HKFRSs) issued by the HKICPA which are relevant to the Groups operations and mandatory

for the financial year ending 31st December 2009:

HKAS 1 (Revised) Presentation of Financial Statements

HKAS 23 (Revised) Borrowing Costs

HKFRS 2 Amendment Share-based Payment Vesting Conditions and Cancellations

HKFRS 7 Amendment Improving Disclosures about Financial Instruments

HKFRS 8 Operating Segments


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10

Notes to the Unaudited Condensed Consolidated

Interim Financial Information(Continued)

2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES (Continued)

Adoption of new HKFRSs (Continued)

Improvements to existing standards

HKAS 1 Amendment Presentation of Financial Statements

HKAS 16 Amendment Property, Plant and Equipment

HKAS 19 Amendment Employee Benefits

HKAS 23 Amendment Borrowing Costs

HKAS 27 Amendment Consolidated and Separate Financial Statements

HKAS 28 Amendment Investments in AssociatesHKAS 31 Amendment Interests in Joint Ventures

HKAS 36 Amendment Impairment of Assets

HKAS 38 Amendment Intangible Assets

HKAS 39 Amendment Financial Instruments: Recognition and Measurement

HKAS 40 Amendment Investment Property

The adoption of the above new HKFRSs in the current period did not have any significant effect on the Unaudited

Condensed Consolidated Interim Financial Information or result in any substantial changes in the Groups significant

accounting policies except for certain revised presentation and disclosures in the Unaudited Condensed Consolidated

Interim Financial Information.

The HKICPA has issued certain new and revised standards, interpretations and amendments which are not yet

effective for the year ending 31st December 2009 and not early adopted by the Group. The Group will apply these

standards, interpretations and amendments as and when they become effective. The Group has already commenced

an assessment of the related impact to the Group and is not yet in a position to state whether any substantial

changes to Groups significant accounting policies and presentation of the financial information will be resulted.


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3. SEGMENT INFORMATION

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating

decision-maker. The chief operating decision-maker is responsible for allocating resources and assessing performance

of the operating segments. The operating segments were determined based on the reports reviewed by

management. The following operating segments were identified in accordance with the Groups businesses:

(i) container terminal and related businesses including terminal operation, container handling, transportation and

storage;

(ii) container leasing, management, sale and related businesses;

(iii) container manufacturing and related businesses; and

(iv) logistics and related businesses.

The performance of the operating segments were assessed based on their segment profit/(loss) attributable to equity

holders of the Company and segment assets, which is measured in a manner consistent with that in the Unaudited

Condensed Consolidated Interim Financial Information.

Additions to non-current assets comprise additions to property, plant and equipment, leasehold land and land use

rights, intangible assets, investments in jointly controlled entities and associates, and other non-current assets.

Segment assets

Container

terminal and

related

businesses

Containerleasing,

management,

sale and

related

businesses

Container

manufacturing

and related

businesses

Logistics and

related

businesses

Segment

total Corporate

Elimination of

inter-segment

loans Total

US$000 US$000 US$000 US$000 US$000 US$000 US$000 US$000

At 30th June 2009

Segment assets 1,770,289 1,478,354 562,376 249,666 4,060,685 351,084 (45,716) 4,366,053

Segment assets include:

Jointly controlled entities 418,884 249,666 668,550 668,550

Associates (note a) 135,769 562,376 698,145 698,145

Available-for-sale financial assets 323,581 323,581 323,581

At 31st December 2008

Segment assets 1,610,103 1,474,658 585,928 225,793 3,896,482 391,794 (75,068) 4,213,208

Segment assets include:

Jointly controlled entities 406,572 9,784 225,793 642,149 642,149

Associates (note a) 132,364 576,144 708,508 708,508

Available-for-sale financial assets 323,000 323,000 2,119 325,119


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3. SEGMENT INFORMATION (Continued)

Segment revenue, results and other information

Container

terminal and

related

businesses

Container

leasing,

management,

sale and

related

businesses

Container

manufacturing

and related

businesses

Logistics and

related

businesses

Segment

total Corporate

Elimination of

inter-segment

finance

(income)/

costs Total

US$000 US$000 US$000 US$000 US$000 US$000 US$000 US$000

Six months ended 30th June 2009

Revenue external sales 44,623 114,405 159,028 159,028

Segment profit/(loss) attributable to

equity holders of the Company 44,662 37,049 29,322 17,020 128,053 (23,544) 104,509


equity holders of the Company

includes:

Finance income 286 79 365 6,596 (3,825) 3,136

Finance costs (6,637) (6,756) (13,393) (13,429) 3,825 (22,997)


jointly controlled entities 25,614 17,020 42,634 42,634

associates (note b) 4,092 23,806 27,898 27,898

Profit on disposal of a jointly

controlled entity 5,516 5,516 5,516

Income tax expenses (170) (183) (353) (7,255) (7,608)

Depreciation and amortisation (8,176) (39,667) (47,843) (230) (48,073)

Provision for impairment of

property, plant and equipment (3,040) (3,040) (3,040)

Other non-cash expenses (2) (455) (457) (409) (866)

Additions to non-current assets (138,143) (47,259) (185,402) (9) (185,411)

Six months ended 30th June 2008

Revenue external sales 40,700 121,365 162,065 162,065


equity holders of the Company 69,593 52,691 29,126 16,229 167,639 (14,487) 153,152


equity holders of the Company

includes:

Finance income 175 512 687 2,854 (1,261) 2,280

Finance costs (4,577) (12,101) (16,678) (9,361) 1,261 (24,778)


jointly controlled entities 43,494 16,229 59,723 59,723

associates (note b) 8,696 29,126 37,822 37,822

Income tax expenses (310) (818) (1,128) (4,855) (5,983)

Depreciation and amortisation (6,412) (39,078) (45,490) (258) (45,748)

Provision for impairment of

property, plant and equipment (23) (23) (23)

Other non-cash expenses (5) (47) (52) (187) (239)

Additions to non-current assets (157,603) (304,452) (259,360) (721,415) (263) (721,678)


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3. SEGMENT INFORMATION (Continued)

Notes:

(a) As at 30th June 2009, the Groups share of the unaudited net assets of CIMC, a listed associate of the Group, amounted to

US$562,376,000 (31st December 2008: US$576,144,000).

(b) For the six months ended 30th June 2009, the Groups share of unaudited profit (net of income tax expenses) of CIMC

amounted to US$23,806,000 (2008: US$29,126,000).

(c) Geographical information

In respect of container leasing, management, sale and related businesses, the movements of containers and generator sets

of the Group and those managed on behalf of third parties under operating leases or finance leases are known through

report from the lessees but the Group is not able to control the movements of containers and generator sets except to thedegree that the movements are restricted by the terms of the leases or where safety of the containers and generator sets is

concerned. It is therefore impracticable to present geographical information on revenue of these related businesses.

The Groups non-current assets are primarily dominated by its containers and generator sets. These containers and generator

sets are primarily utilised across geographical markets for shipment of cargoes throughout the world. Accordingly, it is also

impractical to present the geographical information of these non-current assets.

The activities of the container terminal and related businesses as conducted by certain subsidiaries of the Group are

predominantly carried out in Mainland China, Hong Kong and Greece.

The activities of the Groups jointly controlled entities and associates are predominantly carried out in the following

geographical areas:

Business segments Geographical areas

Container terminal and related businesses Mainland China, Hong Kong, Singapore, Belgium and Egypt

Container manufacturing and related businesses Mainland China

Logistics and related businesses Mainland China, Hong Kong, Dubai and New York


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4. PROPERTY, PLANT AND EQUIPMENT

During the six months ended 30th June 2009, the Group acquired property, plant and equipment of US$97,140,000

(2008: US$418,087,000) and disposed of property, plant and equipment and transferred to inventories with a total

net book value of US$7,767,000 (2008: US$34,376,000).

5. DERIVATIVE FINANCIAL INSTRUMENTS

As at

30th June

2009

As at

31st December

2008

US$000 US$000

Interest rate swap contracts fair value hedges (note) 16,135 24,215

Note:

The notional principal amount of the related interest rate swap contracts amounted to US$200,000,000 (2008: US$200,000,000)

which were committed with the interest rates ranging from 1.05% to 1.16% (2008: 1.05% to 1.16%) per annum above the

London Interbank Offered Rate. These interest rate swap contracts had been designated as a hedge of the fair value of the notes

issued by the Group (note 10).

6. OTHER NON-CURRENT ASSETS

Included in other non-current assets was the upfront concession fee of Euro 50,000,000 incurred in respect of the

concession agreement with Piraeus Port Authority S.A. (PPA) for the concession of Pier 2 and 3 of the Piraeus Port

in Greece for a term of 35 years (Concession). The Concession would commence on 1st October 2009.

The total consideration payable to PPA over the 35-year term of the Concession was estimated to be approximately

Euro 831,000,000 in present value terms and the capital commitments amounted to approximately

Euro 236,000,000 in present value terms.


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7. TRADE AND OTHER RECEIVABLES

As at

30th June

2009

As at

31st December

2008

US$000 US$000

Trade receivables (note a)

third parties 34,691 32,719

fellow subsidiaries (notes b and c) 30,604 26,367

jointly controlled entities (note b) 978 450

related companies (note b) 364 227

66,637 59,763

Less: provision for impairment (390) (417)

66,247 59,346

Other receivables, deposits and prepayments 90,275 78,414

Rent receivable collected on behalf of owners of managed containers (note d) 37,905 39,525

Current portion of finance lease receivables 927 943

Amounts due from (note b)

fellow subsidiaries 90 165

jointly controlled entities (note e) 93,591 53,544

associates (note e) 9,609 323 investee companies (note e) 3,528

related companies 5 5

minority shareholders of subsidiaries 1,938

304,115 232,265

Notes:

(a) The Group grants credit periods of 30 to 90 days to its customers. The ageing analysis of the trade receivables (net of

provision) was as follows:

As at30th June

2009

As at

31st December2008

US$000 US$000

Within 30 days 21,612 24,76231-60 days 23,831 23,41261-90 days 16,322 6,832Over 90 days 4,482 4,340

66,247 59,346

(b) The amounts due from fellow subsidiaries, jointly controlled entities, associates, investee companies, related companies andminority shareholders of subsidiaries are unsecured and interest free. Trading balances have credit periods ranging from 30

to 90 days while other balances have no fixed terms of repayment.


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16



7. TRADE AND OTHER RECEIVABLES (Continued)

(c) The balance mainly represented container leasing income receivable from fellow subsidiaries and included a receivablebalance from COSCO Container Lines Company Limited (COSCON), a fellow subsidiary, of US$27,506,000 (31st

December 2008: US$24,218,000). During the six months ended 30th June 2009, the container leasing income from

COSCON and the other fellow subsidiaries amounted to US$67,131,000 (2008: US$67,571,000) and US$6,000 (2008: US$Nil) respectively.

(d) The balance represented the unsettled billings to be collected by the Group in respect of the leases of those containersmanaged on behalf of third parties.

(e) The amounts receivable mainly represented dividend and interest receivable from the jointly controlled entities, associates

and investee companies.

8. CASH AND CASH EQUIVALENTS

As at

30th June

2009

As at

31st December

2008

US$000 US$000

Total time deposits, bank balances and cash (note) 418,126 429,041

Restricted bank deposits included in current assets (77,435)

418,126 351,606

Representing:

Time deposits 200,692 161,684

Bank balances and cash 217,434 189,922

418,126 351,606

Note:

As at 30th June 2009, cash and cash equivalents of US$118,662,000 (31st December 2008: US$68,331,000) were denominated

in Renminbi and United States dollars which are held by certain subsidiaries of the Group with bank accounts operating in the PRCwhere exchange controls apply.


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9. SHARE CAPITAL

As at

30th June

2009

As at

31st December

2008

US$000 US$000

Authorised:

3,000,000,000 (31st December 2008: 3,000,000,000)

ordinary shares of HK$0.10 each 38,462 38,462

Issued and fully paid:

2,245,029,298 (31st December 2008: 2,245,029,298)

ordinary shares of HK$0.10 each 28,792 28,792

Note:

Share options

Movements of the share options, which have been granted under the share option schemes adopted by the Company on 23rd

May 2003, during the period are set out below:

Number of Share Options

Category

Exercise

price

Outstanding

as at 1st

January

2009

Exercised

during the

period

Transfer

(to)/from

other

categories

during the

period

Lapsed

during the

period

Outstanding

as at 30th

June

2009

HK$

Directors 9.54 800,000 800,000

13.75 5,250,000 5,250,000

19.30 2,300,000 2,300,000

Continuous contract 9.54 1,611,000 (4,000) 1,607,000

employees 13.75 14,072,000 (250,000) 13,822,000

19.30 14,580,000 (10,000) (320,000) 14,250,000

Others 9.54 50,000 50,000

13.75 4,120,000 4,120,000

19.30 10,000 10,000

42,783,000 (574,000) 42,209,000


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18



10. BORROWINGS

As at

30th June

2009

As at

31st December

2008

US$000 US$000

Long term borrowings unsecured 1,423,130 1,413,361

Amounts due within one year included under current liabilities (71,188) (56,406)

1,351,942 1,356,955

Short term bank loans unsecured 41,716 10,974

Notes:

(a) The analysis of long term borrowings is as follows:

As at30th June

2009

As at

31st December

2008US$000 US$000

Wholly repayable within five years

Bank loans 1,000,302 588,258 Notes 313,928 321,391

1,314,230 909,649Not wholly repayable within five years

Bank loans 108,900 503,712

1,423,130 1,413,361

(b) The maturity of long term borrowings is as follows:

As at30th June

2009

As at

31st December2008

US$000 US$000

Bank loansWithin one year 71,188 56,406Between one and two years 97,214 89,595Between two and five years 862,540 760,354Over five years 78,260 185,615

1,109,202 1,091,970Notes

Between two and five years 313,928 321,391

1,423,130 1,413,361

Notes with principal amount of US$300,000,000 were issued by a subsidiary of the Company to investors on 3rd October

2003. The notes carried a fixed interest yield of 5.96% per annum and were issued at a price of 99.367 per cent of theirprincipal amount with a fixed coupon rate of 5.875% per annum, resulting in a discount on issue of US$1,899,000. The

notes bear interest from 3rd October 2003, payable semi-annually in arrear on 3rd April and 3rd October of each year,commencing on 3rd April 2004. The notes are guaranteed unconditionally and irrevocably by the Company and listed on

the Singapore Exchange Limited.


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11. TRADE AND OTHER PAYABLES

As at

30th June

2009

As at

31st December

2008

US$000 US$000

Trade payables (note a)

third parties 13,061 9,029

fellow subsidiaries (note b) 156 140

jointly controlled entities (notes b and c) 2

subsidiaries of an associate (notes b and c) 11,649 60 related companies (note b) 14 1

minority shareholders of subsidiaries (note b) 1,260 1,089

26,140 10,321

Other payables and accruals 49,952 49,555

Payable to owners of managed containers (note d) 35,203 39,897

Current portion of other long term liabilities 2,267 2,267

Dividend payable 31,029 34

Amounts due to (note b)

fellow subsidiaries 78 3

jointly controlled entities 8 subsidiaries of an associate 7

related companies 2

minority shareholders of subsidiaries 12,904 21,446

157,582 123,531

Notes:

(a) The ageing analysis of trade payables was as follows:

As at

30th June2009

As at

31st December2008

US$000 US$000

Within 30 days 13,423 4,920

31-60 days 6,260 745

61-90 days 356 296

Over 90 days 6,101 4,360

26,140 10,321


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20



11. TRADE AND OTHER PAYABLES (Continued)

(b) The amounts due to fellow subsidiaries, jointly controlled entities, subsidiaries of an associate, related companies and

minority shareholders of subsidiaries are unsecured and interest free. Trading balances have similar credit periods granted as

those of other third party suppliers while the other balances have no fixed terms of repayment.

(c) The balances represented the amounts payable to jointly controlled entities and subsidiaries of an associate of the Group in

respect of the purchases of containers (note 20(a)(viii)).

(d) The balance represented the rental income of the managed containers collected, net of the direct operating expenses of the

managed containers paid by the Group on behalf of third parties and the management fee income entitled by the Group.

12. OPERATING PROFIT

Operating profit is stated after crediting and charging the following:


2009 2008

US$000 US$000

Crediting

Dividend income from

a listed investment 132 unlisted investments 12,889 12,924

Rental income from investment properties 36 25

Profit on disposal of an available-for-sale financial asset 85 1,959

Profit on disposal of property, plant and equipment 330 763

Write back of provision for impairment of trade receivables, net 42 1,658

Charging

Depreciation and amortisation 48,073 45,748

Provision for impairment of property, plant and equipment 3,040 23


22/56




13. FINANCE INCOME AND COSTS


2009 2008

US$000 US$000

Finance income

Interest income on

bank balances and deposits 544 1,604

loans to a jointly controlled entity and associates 2,592 676

3,136 2,280

Finance costs

Interest expenses on

bank loans (15,294) (15,775)

notes wholly repayable within five years (8,157)

notes not wholly repayable within five years (9,313)

Fair value loss on derivative financial instruments (8,080) (174)

Fair value adjustment of notes attributable to interest rate risk 7,639 426

(441) 252

Amortised amount of

discount on issue of notes (90) (96)

transaction costs on bank loans and notes (86) (91)

(24,068) (25,023)

Less: amount capitalised in construction in progress 1,617 291

(22,451) (24,732)

Other incidental borrowing costs and charges (546) (46)

(22,997) (24,778)

Net finance costs (19,861) (22,498)


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22



14. PROFIT ON DISPOSAL OF A JOINTLY CONTROLLED ENTITY

A wholly owned subsidiary of the Group entered into a sale and purchase agreement to dispose of its entire 20%

shareholding interest in Shanghai CIMC Reefer Containers Co.,Ltd (Shanghai CIMC Reefer), a then jointly

controlled entity, at a consideration of US$16,400,000 to CIMC, an associate. The transaction was completed in

January 2009 and resulted in a profit of US$5,516,000.

15. INCOME TAX EXPENSES


2009 2008US$000 US$000

Current income tax

China mainland taxation 3,933 348

Overseas taxation 353 (407)

4,286 (59)

Deferred income tax charge 3,322 6,042

7,608 5,983

The Groups shares of income tax expenses of jointly controlled entities and associates of US$8,671,000 (2008:

US$9,610,000) and US$7,558,000 (2008: US$4,142,000) are included in the Groups shares of profits less losses of

jointly controlled entities and associates respectively.

No Hong Kong profits tax has been provided as the Group does not have estimated assessable profit for the period

(2008: US$Nil).

Taxation on overseas profits has been calculated on the estimated assessable profit for the period at the rates of

taxation prevailing in the countries in which the Group operates.

Deferred taxation is calculated in full on temporary differences under the liability method using tax rates substantivelyenacted by the balance sheet date.

As at 30th June 2009, deferred income tax liabilities of US$3,120,000 (31st December 2008: US$3,132,000) have

not been established for the withholding taxation that would be payable on the unremitted earnings of certain

subsidiaries totalling US$10,399,000 (31st December 2008: US$10,440,000) as the directors considered that the

timing of the reversal of the related temporary differences can be controlled and the related temporary difference

will not be reversed or will not be taxable in the foreseeable future.


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16. INTERIM DIVIDEND


2009 2008

US$000 US$000

Interim dividend, declared, of US1.862 cents (2008: US3.514 cents)

per ordinary share 41,802 78,890

Notes:

(a) At a meeting held on 8th April 2009, the directors recommended the payment of a final dividend of HK10.7 cents (equivalentto US1.382 cents) per ordinary share for the year ended 31st December 2008 with a scrip dividend alternative. The dividend

was paid on 20th July 2009 and had been reflected as an appropriation of retained profits in year 2009.

(b) At a meeting held on 27th August 2009, the directors declared an interim cash dividend of HK14.4 cents (equivalent to

US1.862 cents) per ordinary share. The interim cash dividend declared is not reflected as dividend payable in the Unaudited

Condensed Consolidated Interim Financial Information, but will be reflected as an appropriation of retained profits for the

year ending 31st December 2009.

17. EARNINGS PER SHARE

(a) Basic

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by

the weighted average number of ordinary shares in issue during the period.


2009 2008

Profit attributable to equity holders of the Company US$104,509,000 US$153,152,000

Weighted average number of ordinary shares in issue

during the period 2,245,029,298 2,244,984,584

Basic earnings per share US4.66 cents US6.82 cents


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24



17. EARNINGS PER SHARE (Continued)

(b) Diluted

The outstanding share options granted by the Company did not have any dilutive effect on the earnings per

share for the six months ended 30th June 2009, and the diluted earnings per share is equal to the basic

earnings per share for the six months ended 30th June 2009.

In 2008, diluted earnings per share was calculated based on the profit attributable to equity holders of the

Company and the weighted average number of ordinary shares in issue during the period, after adjusting for

the number of dilutive potential ordinary shares deemed to be issued at no considerations as if all outstanding

share options granted by the Company had been exercised.

Six months ended

30th June 2008

Profit attributable to equity holders of the Company US$153,152,000

Weighted average number of ordinary shares in issue during the period 2,244,984,584

Adjustments for assumed issuance of shares on exercise of share options

during the period 3,222,696

Weighted average number of ordinary shares for diluted earnings per share 2,248,207,280

Diluted earnings per share US6.81 cents

18. FINANCIAL GUARANTEE CONTRACTS

As at

30th June

2009

As at

31st December

2008US$000 US$000

Bank guarantee to an associate 34,600 37,057

The directors of the Company consider that it is not probable for a claim to be made against the Group under the

above guarantee as at the balance sheet date.

The fair value of the guarantee contracts is not material and has not been recognised.


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19. CAPITAL COMMITMENTS

Other than those disclosed in note 6, the Group had the following significant capital commitments at 30th June

2009:

As at

30th June

2009

As at

31st December

2008

US$000 US$000

Authorised but not contracted for:

Containers 17,719 89,545

Computer system under development 1,282 749 Other property, plant and equipment 437,991 464,142

456,992 554,436

Contracted but not provided for:

Investments (note) 578,793 585,225

Containers 6,388

Other property, plant and equipment 53,813 83,714

632,606 675,327

The Groups share of capital commitments of the jointly controlled entities

themselves not included in the above are as follows:

Authorised but not contracted for 28,358 17,031

Contracted but not provided for 17,496 8,108

45,854 25,139

Note:

The capital commitments in respect of investments of the Group as at 30th June 2009 are as follows:

As at30th June

2009

As at

31st December

2008

US$000 US$000

Investments in:

Qingdao Qianwan Container Terminal Co., Ltd. 64,997 64,997 Antwerp Gateway NV 69,036 75,490 Dalian Port Container Terminal Co., Ltd. 42,741 42,724 COSCO Ports (Nansha) Limited 177,925 177,854 Tianjin Port Euroasia International Terminal Co., Ltd. 102,753 102,713 Others 58,087 58,218

515,539 521,996

Terminal projects in:

Shanghai Yangshan Port Phase II 58,549 58,526

Others 4,705 4,703

63,254 63,229

578,793 585,225


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26



20. RELATED PARTY TRANSACTIONS

The Group is controlled by China COSCO which owns 50.96% of the Companys shares as at 30th June 2009. The

parent company of China COSCO is COSCO.

COSCO itself is a state-owned enterprise and is controlled by the PRC government, which also owns a significant

portion of the productive assets in the PRC. In accordance with HKAS 24 Related Party Disclosures issued by the

HKICPA, other state-owned enterprises and their subsidiaries (other than COSCO group companies), directly or

indirectly controlled by the PRC government, are also defined as related parties of the Group. On that basis, related

parties include COSCO and its subsidiaries, other state-owned enterprises and their subsidiaries directly or indirectly

controlled by PRC government, other entities and corporations in which the Company is able to control or exercise

significant influence and key management personnel of the Company and COSCO as well as their close familymembers.

In addition to those disclosed elsewhere in the Unaudited Condensed Consolidated Interim Financial Information, the

following is a summary of significant related party transactions entered into in the ordinary course of business

between the Group and its related parties during the period.

(a) Sales/purchases of goods and services


2009 2008

US$000 US$000

Container rental income from (note i)

fellow subsidiaries 67,137 67,571

other state-owned enterprises 162 157

Compensation for loss of containers from a fellow subsidiary (note ii) 516 628

Handling, storage and transportation income from (note iii)

fellow subsidiaries 1,928 2,528

a jointly controlled entity 514 740

Management fee and service fee income from (note iv)

jointly controlled entities 1,938 1,840 associates 53 153

an investee company 26 54

Container terminal handling and storage income received from

fellow subsidiaries and an associate of the parent company (note v) 3,817 4,431

Logistics services fee to a minority shareholder of a subsidiary (note vi) (509) (1,602)

Electricity expense and supply of fuel from a minority shareholder of

a subsidiary (note vii) (537) (776)

Purchase of containers from (note viii)

subsidiaries of CIMC (19,854) (99,431)

jointly controlled entities (37,353)

Proceeds on disposal of a jointly controlled entity to CIMC (note 14) 16,400


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20. RELATED PARTY TRANSACTIONS (Continued)

(a) Sales/purchases of goods and services (Continued)

Notes:

(i) The Group has conducted container leasing business with COSCON, other fellow subsidiaries and other state-owned

enterprises. The container rental income was charged based on terms agreed between the Group and the respective

parties in concern.

(ii) During the period, the Group had compensation received and receivable of US$516,000 (2008: US$628,000) from

COSCON for the loss of containers under operating leases, resulting in a profit of US$90,000 (2008: US$106,000).

(iii) The handling, storage and transportation income received from fellow subsidiaries and a jointly controlled entity of

the Group were conducted at terms as set out in the agreements entered into between the Group and these fellow

subsidiaries and the jointly controlled entity.

(iv) The Group provided advisory and management services to COSCO-HIT Terminals (Hong Kong) Limited, a jointly

controlled entity of the Group, during the period. Management fee was charged and agreed at HK$20,000,000

(equivalent to US$2,580,000) (2008: HK$20,000,000 (equivalent to US$2,566,000)) per annum.

Other management fee and service fee income charged to jointly controlled entities, associates and an investee

company were agreed between the Group and the respective parties in concern.

(v) The container terminal handling and storage income received from fellow subsidiaries and an associate of COSCO in

relation to the cargoes shipped from/to Zhangjiagang, Yangzhou and Quanzhou ports were conducted by the Group

by reference to rates as set out by the Ministry of Communications of the PRC.

(vi) The logistics service fee paid to a minority shareholder of a subsidiary was charged at rates as mutually agreed.

(vii) Electricity expense and supply of fuel from a minority shareholder of a subsidiary were charged at rates as mutually

agreed.

(viii) The purchases of containers from subsidiaries of CIMC and jointly controlled entities of the Group were conducted at

terms as set out in the agreements entered into between the Group and the respective parties in concern.


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28




(b) Balances with state-owned banks

As at

30th June

2009

As at

31st December

2008

US$000 US$000

Bank deposits balances

in China mainland 118,662 68,345

outside China mainland 271,365 228,703

Long term bank loans


outside China mainland 436,837 436,700

Short term bank loans


The deposits and loans with state-owned banks were in accordance with the terms as set out in the respective

agreements or as mutually agreed between the parties in concern.

(c) Balances with other state-owned enterprises

As at

30th June

2009

As at

31st December

2008

US$000 US$000

Other payable to state-owned enterprises 6,715 5,760

The balance represented the port construction levies collected by subsidiaries of the Group on behalf of the

port authorities in Zhangjiagang and Quanzhou pursuant to a notice issued by the Ministry of Communications

of the PRC. The balance is unsecured, interest free and has no fixed terms of repayment.


30/56





(d) Key management compensation


2009 2008

US$000 US$000

Salaries, bonuses and other allowances 1,848 1,714

Contribution to retirement benefit schemes 4 3

1,852 1,717

Key management includes directors of the Company and five (2008: four) senior management members of the

Group.

21. EVENT AFTER THE BALANCE SHEET DATE

On 27th August 2009, COSCO Pacific Logistics Company Limited (CP Logistics), a wholly owned subsidiary of the

Company, entered into an equity transfer agreement with China COSCO, pursuant to which CP Logistics

conditionally agreed to sell and China COSCO conditionally agreed to purchase CP Logistics entire 49% equity

interest in COSCO Logistics Co., Ltd. (COSCO Logistics), a jointly controlled entity of the Group, at a cash

consideration of RMB2,000,000,000. Apart from the aforesaid cash consideration, CP Logistics is entitled to receive

a special distribution of an additional cash amount equivalent to 273/365 (representing the first nine months of

2009) of 49% of 90% of the audited consolidated net profit after tax and minority interest of COSCO Logistics for

the year ending 31st December 2009 as shown in the audited consolidated accounts of COSCO Logistics for the year

ending 31st December 2009 prepared in accordance with the accounting standards in the PRC (the Special

Distribution), payment of which shall be made by COSCO Logistics on or before 30th June 2010, and coordinated

by China COSCO. The disposal constituted a major disposal and connected transaction under the Rules Governing

the Listing of Securities on The Stock Exchange of Hong Kong Limited and the completion will be subject to the

approval by the independent shareholders of the Company. The estimated pre-tax gain, which had not taken into

account the Special Distribution and after direct expenses, would be approximately US$102,500,000.


31/56

(incorporated in Bermuda with limited liability)

REPORT ON REVIEW OF INTERIM FINANCIAL INFORMATIONTo the Board of Directors of COSCO Pacific Limited

30

Introduction

We have reviewed the interim financial information set out on pages 3 to 29, which comprises the condensed consolidated

balance sheet of COSCO Pacific Limited (the Company) and its subsidiaries (collectively the Group) as at 30th June

2009 and the related condensed consolidated statements of income, comprehensive income, changes in equity and cash

flows for the six-month period then ended, and a summary of significant accounting policies and other explanatory notes

(the Interim Financial Information). The Rules Governing the Listing of Securities on the Main Board of The Stock

Exchange of Hong Kong Limited require the preparation of a report on interim financial information to be in compliance

with the relevant provisions thereof and Hong Kong Accounting Standard 34 Interim Financial Reporting issued by the

Hong Kong Institute of Certified Public Accountants (the HKICPA) (HKAS 34). The directors of the Company are

responsible for the preparation and presentation of this Interim Financial Information in accordance with HKAS 34. Our

responsibility is to express a conclusion on this Interim Financial Information based on our review and to report our

conclusion solely to you, as a body, in accordance with our agreed terms of engagement and for no other purpose. We donot assume responsibility towards or accept liability to any other person for the contents of this report.

Scope of review

Except as explained in the following paragraph, we conducted our review in accordance with Hong Kong Standard on

Review Engagements 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity

issued by the HKICPA. A review of interim financial information consists of making inquiries, primarily of persons

responsible for financial and accounting matters, and applying analytical and other review procedures. A review is

substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing and

consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be

identified in an audit. Accordingly, we do not express an audit opinion.

Basis of qualified conclusion

The scope of our review did not extend to the Groups shares of net assets and result of a listed associate, China

International Marine Containers (Group) Co., Ltd, which was accounted for under the equity method on the basis of its

published interim financial information because the associate did not engage its auditor to perform a review. Had either a

review been conducted by its auditor or we been able to perform alternative review procedures on the underlying net

assets and result of the aforesaid listed associate, matters might have come to our attention indicating that adjustments

might be necessary to the Interim Financial Information.

Qualified conclusion

Except for any adjustments to the Interim Financial Information that we might have become aware of had the above-

mentioned limitation of scope not existed, based on our review, nothing has come to our attention that causes us to

believe that the Interim Financial Information is not prepared, in all material respects, in accordance with HKAS 34.

PricewaterhouseCoopers

Certified Public Accountants

Hong Kong, 27th August 2009


32/56


INTERIM DIVIDEND

The directors have declared an interim cash dividend of HK14.4 cents (corresponding period of 2008: HK27.4 cents) per

share for the six months ended 30th June 2009. The interim cash dividend will be payable on 22nd September 2009 to

shareholders whose names appear on the register of members of the Company on 15th September 2009.

CLOSURE OF REGISTER OF MEMBERS

The register of members of the Company will be closed from Thursday, 10th September 2009 to Tuesday, 15th September

2009, both days inclusive, during which period no transfer of shares will be registered. In order to qualify for the interim

cash dividend, all transfer documents, accompanied by relevant share certificates, must be lodged with the Companys

Hong Kong Registrar and Transfer Office, Tricor Secretaries Limited of 26th Floor, Tesbury Centre, 28 Queens Road East,

Hong Kong, for registration not later than 4:30 p.m. on Wednesday, 9th September 2009.

MANAGEMENT DISCUSSION AND ANALYSISFinancial Review

Overall analysis of results

Being affected by the global environment, the container terminal and the container leasing, management and sale

businesses were seriously struck in the first half of 2009. The profit attributable to equity holders was US$104,509,000

(corresponding period of 2008: US$153,152,000), a 31.8% decrease over the same period of last year.

For the container terminal business, the Groups container terminal throughput was 20,207,025 TEUs in the first half of

2009 (corresponding period of 2008: 22,088,046 TEUs), representing a 8.5% decrease over the same period of last year.In addition, with the certification and commencement of new terminals berths, depreciation and finance costs were

increased. Hence, profit contribution from the container terminal business dropped 35.8% to US$44,662,000

(corresponding period of 2008: US$69,593,000).

During the period, profit contribution from the container leasing, management and sale businesses amounted to

US$37,049,000 (corresponding period of 2008: US$52,691,000), a decrease of 29.7% over the same period of last year.

As at 30th June 2009, the total container fleet amounted to 1,605,963 TEUs (30th June 2008: 1,632,356 TEUs), in which

745,185 TEUs (30th June 2008: 866,448 TEUs) were owned containers, 118,094 TEUs (30th June 2008: Nil) were sale-

and-leaseback containers and 742,684 TEUs (30th June 2008: 765,908 TEUs) were managed containers.

Profit from the container manufacturing business increased slightly by 0.7% to US$29,322,000 in the first half of 2009

(corresponding period of 2008: US$29,126,000), including the profit of US$23,806,000 (corresponding period of 2008:

US$29,126,000) attributable to CIMC and profit of US$5,516,000 (corresponding period of 2008: Nil) generated from the

disposal of 20% equity interest in Shanghai CIMC Reefer.

Profit from the logistics business was US$17,020,000 (corresponding period of 2008: US$16,229,000), a 4.9% rise over

the same period of last year.


33/56

32

Financial Analysis

Revenue

Revenue of the Group in the first half of 2009 was US$159,028,000 (corresponding period of 2008: US$162,065,000), a

1.9% slight decrease over the same period of last year. The revenue was mainly attributable to the container leasing,

management and sale businesses, totalling US$114,405,000 (corresponding period of 2008: US$121,365,000), dropped

5.7% over the same period of last year, which primarily included container leasing income and revenue from disposal of

returned containers. For revenue from container leasing, as the fleet capacity of owned containers and sale-and-leaseback

containers amounted to 745,185 TEUs and 118,094 TEUs respectively as at 30th June 2009 (30th June 2008: 866,448

TEUs and Nil respectively). During the period, revenue from container leasing amounted to US$99,098,000 (corresponding

period of 2008: US$93,439,000), representing a 6.1% rise over the same period of last year. On the other hand, since the

number of returned containers, which are available for sale, sold during the period significantly dropped to 10,124 TEUs

(corresponding period of 2008: 20,072 TEUs), it resulted in the revenue from disposal of returned containers during the

period decreased to US$10,596,000 (corresponding period of 2008: US$22,252,000).

For the container terminal operations and related business with controlling stakes, revenue from terminals with controllingstakes amounted to US$41,986,000 during the period (corresponding period of 2008: US$37,338,000), represented an

increase of 12.4% over the same period of last year. The increase was mainly contributed by Jinjiang Pacific Ports

Development Co., Ltd. (Jinjiang Pacific Terminal) and Quan Zhou Pacific Container Terminal Co., Ltd. (Quan Zhou

Pacific Terminal). Having commenced its operation in April 2008, Jinjiang Pacific Terminal achieved a throughput of

129,770 TEUs and 780,274 tons of break-bulk cargo in the first half of 2009 (corresponding period of 2008: 63,367 TEUs

and 371,491 tons of break-bulk cargo) and recorded a revenue of US$8,190,000 (corresponding period of 2008:

US$3,016,000). Besides, the throughput of Quan Zhou Pacific Terminal during the period was 439,734 TEUs

(corresponding period of 2008: 469,881 TEUs) and 593,967 tons of break-bulk cargo (corresponding period of 2008:

352,894 tons). The increase in break-bulk cargo throughput resulted in a rise in revenue to US$16,587,000 (corresponding

period of 2008: US$15,067,000), representing an increase of 10.1%. Zhangjiagang Win Hanverky Container Terminal Co.,

Ltd. recorded a 20.0% drop in throughput to 301,513 TEUs (corresponding period of 2008: 377,091 TEUs) and a 18.9%

drop in revenue over the same period of last year to US$7,959,000 (corresponding period of 2008: US$9,818,000).

Throughput of Yangzhou Yuanyang International Ports Co., Ltd. amounted to 93,973 TEUs and 5,647,634 tons of break-

bulk cargo (corresponding period of 2008: 127,285 TEUs and 5,843,630 tons of break-bulk cargo) with a revenue of

US$9,250,000 (corresponding period of 2008: US$9,437,000), a slight decrease of 2.0% over the same period of last

year.

Cost of sales

Cost of sales mainly comprised depreciation charge of owned containers, net carrying amount of returned containers

disposed, container rental expense for the sale-and-leaseback business and operating expenses of terminal companies.

Cost of sales in the first half of 2009 was US$86,019,000 (corresponding period of 2008: US$77,676,000), an increase of

10.7% over the same period of last year. In July 2008, the Group leased back the containers which had been transferred

to CBA USD Investments Pty Limited, and therefore incurred a container rental expense of US$6,193,000 (corresponding

period of 2008: Nil). In addition, depreciation charge for containers increased to US$38,550,000 during the period

(corresponding period of 2008: US$38,012,000). The number of returned containers disposed of decreased to 10,124

TEUs (corresponding period of 2008: 20,072 TEUs) and the net carrying amount of disposed returned containers fell to

US$9,320,000 (corresponding period of 2008: US$18,120,000). The commencement of operation of Jinjiang Pacific

Terminal in April 2008 led to a rise of the total operating expenses in terminal subsidiaries to US$25,227,000 during the

period (corresponding period of 2008: US$18,223,000).


34/56


Investment income

Investment income, comprising mainly dividends income, was US$12,925,000 (corresponding period of 2008:

US$13,081,000), a decrease of 1.2% over the same period of last year. Among that, Yantian International Container

Terminals Co., Ltd. declared its 2009 interim dividend of US$9,363,000 during the period (corresponding period of 2008:

declared its 2008 interim dividend of US$9,297,000). Tianjin Five Continents International Container Terminal Co., Ltd.

and Dalian Port Container Co., Ltd. declared its 2008 dividends of US$2,033,000 and US$1,493,000 respectively

(corresponding period of 2008: declared its 2007 dividend of US$2,267,000 and US$1,360,000 respectively).

Administrative expenses

During the period, administrative expenses was US$28,480,000 (corresponding period of 2008: US$24,970,000), a rise of

14.1% over the same period of last year. The increase was mainly due to the newly-built Xiamen Ocean Gate Container

Terminal Co., Ltd., Piraeus Container Terminal S.A. (Piraeus Terminal) and those of Jinjiang Pacific Terminal being

consolidated since April 2008.

Net other operating income

Net other operating income in the first half of 2009 was US$98,000 (corresponding period of 2008: US$15,047,000), a

drop of 99.3% over the same period of last year. The drop was mainly attributable to the significant decrease in the

amount incurred from the Groups other operating income items during the period over the same period of last year.

Among which, container repair insurance income decreased to US$413,000 (corresponding period of 2008:

US$4,150,000), the net provision for impairment of trade receivables written back decreased to US$42,000 (corresponding

period of 2008: US$1,658,000) and the profits of US$85,000 incurred by the disposal of equity interest in China Shipping

Container Lines Company Limited during the period (corresponding period of 2008: US$1,959,000). In addition, profit

before tax of US$302,000 and a one-off management income of US$1,110,000 were generated from the disposal of

13,509 TEUs of containers (the Group had provided after sale management service thereafter) which recognised in the

first half of 2008. Such income was not recorded in 2009. Besides, the provision for impairment of containers ofUS$3,040,000 (corresponding period of 2008: US$23,000) recognised in the period resulted in a substantial drop of the

overall net operating income in the period.

Finance costs

Finance costs in the first half of 2009 was US$22,997,000 (corresponding period of 2008: US$24,778,000), a decrease of

7.2% as compared with the same period of last year. Finance costs include interest expenses, the amortisation of

transaction costs over bank loans and notes. The decrease in finance costs was mainly attributable to the decrease in

London Interbank Offer Rate (LIBOR), which caused a decrease in interest expenses. During the period, average cost of

borrowing, including the amortisation of transaction costs over bank loans and notes, was an average 6-month LIBOR plus

146 basis points, similar to that of the same period of 2008. Average borrowings for the period increased to

US$1,450,237,000 (corresponding period of 2008: US$1,097,045,000), an increase of 32.2% as compared with the same

period of last year. Increase in average borrowings partly offset the impact on the decrease in LIBOR.


35/56

34

Share of profits less losses of jointly controlled entities and associates

Affected by the financial tsunami, net share of profit contribution from jointly controlled entities during the current period

amounted to US$42,634,000 (corresponding period of 2008: US$59,723,000), representing a decrease of 28.6% as

compared to the same period of last year. The throughput of COSCO-PSA Terminal Private Limited (COSCO-PSA

Terminal) experienced a substantial drop of 46.5% to 362,379 TEUs (corresponding period of 2008: 677,308 TEUs)

during the period, and recorded a loss of US$1,772,000 (corresponding period of 2008: a profit of US$3,221,000) in the

first half of 2009. In addition, new berths of Guangzhou South China Oceangate Container Terminal Company Limited

(Guangzhou South China Oceangate Terminal) gradually commenced operations in 2008, resulting in a subsequent

increase in depreciation, amortisation and finance costs. Meanwhile, throughput decreased 18.0% to 884,220 TEUs

(corresponding period of 2008: 1,078,564 TEUs) in the period as compared to the same period of 2008, resulting in a loss

of US$6,476,000 (corresponding period of 2008: a loss of US$1,727,000) in Guangzhou South China Oceangate Terminal

during the first half of 2009. During the period, throughput of COSCO-HIT Terminals (Hong Kong) Limited (COSCO-HIT

Terminal) and Shanghai Pudong International Container Terminals Limited (Shanghai Pudong Terminal) were 657,451

TEUs and 1,125,924 TEUs respectively (corresponding period of 2008: 883,700 TEUs and 1,314,428 TEUs respectively),

representing a decrease of 25.6% and 14.3% respectively over the same period of last year. Profit of US$8,863,000 and

US$10,235,000 (corresponding period of 2008: US$12,975,000 and US$12,682,000) were recorded respectively,representing a drop of 31.7% and 19.3% respectively over the same period of last year. Qingdao Qianwan Container

Terminal Co., Ltd. (Qingdao Qianwan Terminal) recorded a slight growth of 2.6% in its throughput to 4,427,379 TEUs

(corresponding period of 2008: 4,315,000 TEUs) during the period. However, due to the initial loss recorded in Qingdao

New Qianwan Container Terminal Co., Ltd., which was consolidated into the performance of Qingdao Container Terminal

in the period, the overall profit decreased to US$12,353,000 (corresponding period of 2008: US$13,938,000),

representing a 11.4% fall over the same period of last year. For the logistics business, COSCO Logistics Co., Ltd. (COSCO

Logistics) recorded a profit of US$17,020,000 (corresponding period of 2008: US$16,229,000), representing a rise of

4.9% over the same period of last year.

During the first half of 2009, share of net profit from associates amounted to US$27,898,000 (corresponding period of

2008: US$37,822,000), a 26.2% decrease as compared to the same period of last year. Among which, throughput ofAntwerp Gateway NV (Antwerp Terminal) dropped 48.3% to 297,045 TEUs during the period (corresponding period of

2008: 574,087 TEUs) with a loss of US$1,543,000 (corresponding period of 2008: a profit of US$701,000). Financial

tsunami and industry competition caused some of the routes of Antwerp Terminal moved out in the first quarter, resulting

in a significant drop of its throughput during the period and a loss was recorded. During the period, the throughput of

Suez Canal Container Terminal S.A.E. (Suez Canal Terminal) amounted to 1,249,102 TEUs (corresponding period of

2008: 1,099,428 TEUs) with a profit of US$4,654,000 (corresponding period of 2008: US$4,333,000), representing a rise

of 7.4%. On the other hand, profits were generated from the disposal of its shares in China Merchants Bank in the period,

it offset the operational loss resulted from the suspension in production in certain dry cargo containers plants of CIMC

since the fourth quarter of 2008, which had not resumed production as at 30th June 2009. Profits of CIMC dropped to

US$23,806,000 (corresponding period of 2008: US$29,126,000), represented a decrease of 18.3%.

Profit on disposal of a jointly controlled entity

In order to concentrate on the development of our core businesses such as the terminal and the container leasing

businesses, the Group completed the disposal of the 20% equity interests in Shanghai CIMC Reefer in the first half of

2009, which generated a profit of US$5,516,000. No such profit was recorded in the corresponding period of 2008.


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Income tax expenses

During the period, income tax expenses amounted to US$7,608,000 (corresponding period of 2008: US$5,983,000),

represented an increase of 27.2% over the same period of last year, among which US$6,956,000 (corresponding period of

2008: US$4,830,000) represented a provision for dividend withholding tax that applied to certain PRC investments of the

Group under the tax reform in the Mainland China.

Financial Position

Cash flow

During the period, net cash from operating activities amounted to US$86,165,000 (corresponding period of 2008:

US$131,000,000). The Group drew bank loans of US$86,042,000 (corresponding period of 2008: US$449,247,000) and

repaid loans of US$38,481,000 (corresponding period of 2008: US$57,629,000) in the first half of the year. Total cash

outflow for investments of the Group during the period amounted to US$29,663,000, mainly comprising US$13,560,000

used in Nanjing Port Longtan Container Co., Ltd., US$9,363,000 in Yantian International Container Terminals (Phase III)

Limited (Yantian Terminal Phase III) by reinvestment of dividend income and US$6,740,000 in Antwerp Terminal. During

the same period of last year, the total cash outflow for investments amounted to US$305,260,000, mainly comprisingUS$259,360,000 for approximately 5.26% additional equity interest in CIMC, US$14,220,000 in Dalian Port Container

Terminal Co., Ltd., US$13,750,000 in Suez Canal Terminal, US$9,297,000 in Yantian Terminal Phase III by reinvestment of

dividend income, US$6,868,000 in Dalian Automobile Terminal Co., Ltd. and US$1,739,000 in Antwerp Terminal. During

the period, an amount of US$163,242,000 (corresponding period of 2008: US$328,382,000) was paid in cash for the

payment of upfront concession fee for Piraeus Port, expansion of existing terminals berths and purchase of property, plant

and equipment, of which US$31,183,000 (corresponding period of 2008: US$247,775,000) was for the purchase of new

containers.

Financing and credit facilities

In response to the global economic downturn and the decrease in the container shipping volume, the Group hasstringently controlled its pace of capital investments during the period, including the investments in terminals and the

acquisition of containers. As at 30th June 2009, total bank loans amounted to US$1,464,846,000 (31st December 2008:

US$1,424,335,000).

As at 30th June 2009, cash balances and available banking facilities amounted to US$418,126,000 and US$348,900,000

respectively (31st December 2008: US$429,041,000 and US$40,236,000 respectively).

Assets and liabilities

As at 30th June 2009, the Groups total assets amounted to US$4,366,053,000 (31st December 2008: US$4,213,208,000)

and total liabilities amounted to US$1,643,681,000 (31st December 2008: US$1,566,905,000). Net assets wereUS$2,722,372,000 (31st December 2008: US$2,646,303,000). Net asset value per share was US$1.21 (31st December

2008: US$1.18), representing a 2.5% increase from the end of last year.

The cash balances of the Group amounted to US$418,126,000 as at 30th June 2009 (31st December 2008:

US$429,041,000). Total outstanding borrowings amounted to US$1,464,846,000 (31st December 2008:

US$1,424,335,000). Total net debt-to-equity ratio was 38.4% (31st December 2008: 37.6%). The interest coverage was

5.9 times, while it was 7.6 times in the corresponding period of last year. No asset was pledged by the Group to banks

and financing institutions (31st December 2008: Nil).


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Debt analysis

As at 30th June 2009 As at 31st December 2008

US$ (%) US$ (%)

By repayment term

Within the first year 112,904,000 7.7 67,380,000 4.7

Within the second year 97,214,000 6.6 89,595,000 6.3

Within the third year 171,202,000 11.7 142,688,000 10.0

Within the fourth year 412,136,000 28.1 285,758,000 20.1

Within the fifth year and after 671,390,000 45.9 838,914,000 58.9

1,464,846,000* 100.0 1,424,335,000* 100.0

By category

Secured borrowings

Unsecured borrowings 1,464,846,000 100.0 1,424,335,000 100.0

1,464,846,000* 100.0 1,424,335,000* 100.0

By denominated currency

US dollar borrowings 1,229,041,000 83.9 1,248,685,000 87.7

RMB borrowings 235,805,000 16.1 175,650,000 12.3

1,464,846,000* 100.0 1,424,335,000* 100.0

* Net of unamortised discount on notes and transaction costs on borrowings and notes.

Contingent liabilities

As at 30th June 2009, the Group provided guarantees on a loan facility granted to an associate of US$34,600,000 (31st

December 2008: US$37,057,000).

Treasury policy

The Group manages its foreign exchange risk by matching the currencies of its loans with the Groups functional currency

of major cash receipts and underlying assets as far as possible. Borrowings for the container leasing business are mainly

denominated in US dollar which is the same currency of its revenue and expenses so as to minimise potential foreign

exchange exposure.

The financing activities of jointly controlled entities and associates were denominated in their respective functionalcurrencies so as to minimise foreign exchange exposure in investments.

The Group continued to exercise stringent control over the use of financial derivatives to hedge against its interest rates

exposure. As at 30th June 2009, outstanding interest rates swap contracts comprised notional principals of contracts

amounting to US$200,000,000 (31st December 2008: US$200,000,000) in total whereby the Group agreed to pay the

banks interest at floating rates ranging from 105 basis points to 116 basis points above 6-month LIBOR in return for

receiving interests from the banks at a fixed interest rate of 5.875% per annum.


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As at 30th June 2009, after adjustment of the fixed rate borrowings for the interest rates swap contracts, 6.8% (31st

December 2008: 7.0%) of the Groups total borrowings were in fixed rate. The Group continued to monitor and regulate

its fixed and floating rates debt portfolio from time to time in light of the market conditions, with a view to minimising its

potential interest rates exposure.

Event after the Balance Sheet Date

On 27th August 2009, CP Logistics, a wholly owned subsidiary of the Company, entered into an equity transfer agreement

with China COSCO, pursuant to which CP Logistics conditionally agreed to sell and China COSCO conditionally agreed to

purchase CP Logistics entire 49% equity interest in COSCO Logistics, a jointly controlled entity of the Group. Please refer

to the announcement of the Company published on the same date on the designated website of Hong Kong Exchanges

and Clearing Limited at www.hkexnews.hk and the website of the Company at www.coscopac.com.hk for details.

Business Review

In the first half of 2009, the real economies and international trade were substantially affected by the global financial

crisis, resulting in a contraction in global economy and world trade volume. Following the implementation of numerous

economic revitalization programs by governments across the globe, signs of improvement from economic recession began

to emerge in major developed countries in the second quarter of 2009.

Bolstered by a series of economic stimulus programs, the macro-economy of China remained relatively stable, achieving

7.1% growth in GDP in the first half of the year. However, economic contractions in Europe and the United States

weighed on Chinas trade performance, its import and export trade declined 23.5% year-on-year in the first half of the

year while the global container transportation also fell. The market competition in the global shipping and China port

industry became more intense, making business operations even more difficult.

COSCO Pacifics terminal, container leasing and container manufacturing businesses had, to a certain extent, inevitably

affected by the challenging market environment. In response to falling operating income and operating profit, COSCOPacific made timely adjustments in its strategies, and pace of its expansion plans. It also substantially reduced its capital

expenditure and exercised stringent cost control. During the period, the total container throughput handled by its

terminals reached 20,207,025 TEUs, representing a 8.5% decline over the same period of last year. As at 30th June 2009,

the container fleet size decreased slightly by 1.6% to 1,605,963 TEUs over the same period of last year.

Terminals

Market review

As a result of the decreases in the total value of exports and imports by 21.8% and 25.4% respectively, the container

throughput of China during the first half year of 2009 decreased by 11.0% to about 55,966,000 TEUs as compared with

the same period of last year. Among the Top 10 China container ports, only four of them recorded growth over the same

period of last year. Shenzhen Port and Shanghai Port, both engaged mainly in the export trade towards Europe and the

United States, recorded relatively significant declines over the same period of last year.


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Top 10 China container ports throughput in the first half of 2009

Port

Throughput

(TEUs)

y-o-y change

(%)

Shanghai 11,662,200 15.6

Shenzhen 8,039,500 21.1

Qingdao 5,099,900 +2.0

Guangzhou 5,098,500 14.5

Ningbo 4,656,400 11.0

Tianjin 4,160,900 +1.9

Xiamen 2,121,700 14.0

Dalian 2,098,500 1.4

Lianyungang 1,341,800 +0.4

Yingkou 1,209,500 +20.0

Source: The website of China Ports Association Container Branch

Business review

In the first two quarters of 2009, COSCO Pacific recorded a decline of 8.0% (corresponding period of 2008: +22.2%) and

9.0% (corresponding period of 2008: +23.1%) in the container throughput for the first and second quarter respectively.

During the first half of the year, the total throughput decreased by 8.5% (corresponding period of 2008: +22.7%) with a

total throughput reaching 20,207,025 TEUs (corresponding period of 2008: 22,088,046 TEUs). The terminal companies in

China handled a total of 18,298,499 TEUs (corresponding period of 2008: 19,737,223 TEUs), a drop of 7.3% over the

same period of last year (corresponding period of 2008: +14.5%), which was less than the drop of 11.0% year-on-year in

China container throughput, mainly due to the outperformance of the terminal companies in Bohai Rim and Southeast

Coast over those in other port regions. The two terminal companies in Southeast Coast, in which the Group owns

controlling stakes drove up the total break-bulk cargo throughput by 6.9% to 7,021,875 tons over the same period of last

year (corresponding period of 2008: 6,568,015 tons).

Regional breakdown of container throughput

1H 2009

(TEUs)

y-o-y change

(%)

% of total

(%)

% of total

y-o-y change

(pp)

Bohai Rim 8,493,867 +1.1 42.1 +4.1

Yangtze River Delta 3,902,197 14.7 19.3 1.4

Pearl River Delta and Southeast Coast 5,902,435 12.7 29.2 1.4

China 18,298,499 7.3 90.6 +1.3

Overseas 1,908,526 18.8 9.4 1.3

Total throughput 20,207,025 8.5 100.0


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Throughput of terminal companies

1H 2009 1H 2008 y-o-y

Terminal companies (TEUs) (TEUs) (%)

Bohai Rim 8,493,867 8,400,703 +1.1

Qingdao Qianwan Container Terminal Co., Ltd. 4,427,379 4,315,000 +2.6

Qingdao Cosport International Container Terminals Co., Ltd. 588,495 572,260 +2.8

Dalian Port Container Co., Ltd. 1,314,773 1,272,752 +3.3

Dalian Port Container Terminal Co., Ltd. 697,356 794,296 12.2

Tianjin Five Continents International Container Terminal Co., Ltd. 943,717 962,681 2.0

Yingkou Container Terminals Company Limited 522,147 483,714 +7.9

Yangtze River Delta 3,902,197 4,576,107 14.7

Shanghai Pudong International Container Terminals Limited 1,125,924 1,314,428 14.3

Shanghai Container Terminals Limited 1,430,306 1,848,826 22.6Ningbo Yuan Dong Terminals Limited 494,794 394,914 +25.3

Zhangjiagang Win Hanverky Container Terminal Co., Ltd. 301,513 377,091 20.0

Yangzhou Yuanyang International Ports Co., Ltd. 93,973 127,285 26.2

Nanjing Port Longtan Container Co., Ltd. 455,687 513,563 11.3

Pearl River Delta & Southeast Coast 5,902,435 6,760,413 12.7

COSCO-HIT Terminals (Hong Kong) Limited 657,451 883,700 25.6

Yantian International Container Terminals Co., Ltd. 3,791,260 4,264,901 11.1

Guangzhou South China Oceangate Container Terminal

Company Limited 884,220 1,078,564 18.0

Quan Zhou Pacific Container Terminal Co., Ltd. 439,734 469,881 6.4

Jinjiang Pacific Ports Development Co., Ltd. 129,770 63,367 +104.8

Overseas 1,908,526 2,350,823 18.8

COSCO-PSA Terminal Private Limited 362,379 677,308 46.5

Antwerp Gateway NV 297,045 574,087 48.3

Suez Canal Container Terminal S.A.E. 1,249,102 1,099,428 +13.6

Total container throughput 20,207,025 22,088,046 8.5

Total break-bulk cargo throughput (tons) 7,021,875 6,568,015 +6.9

During the first half of 2009, the throughput in Bohai Rim rose by 1.1% over the same period of last year (corresponding

period of 2008: +8.2%) to 8,493,867 TEUs (corresponding period of 2008: 8,400,703 TEUs), accounting for 42.1% of the

total throughput. As a result of successful affiliation of new routes, the throughput of Qingdao Qianwan Terminal bucked

the trend with an increase of 2.6% (corresponding period of 2008: +7.2%).


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The throughput in Yangtze River Delta decreased by 14.7% over the same period of last year (corresponding period of

2008: +17.9%) to 3,902,197 TEUs (corresponding period of 2008: 4,576,107 TEUs), accounting for 19.3% of the total

throughput. Ningbo Yuan Dong Terminal stood out among other terminals in the region with an increase of 25.3% year-

on-year. The container throughput of Shanghai Pudong Terminal decreased by 10.3% in the first quarter, representing a

better performance over Shanghai Port of -15.1%. However, the container throughput decreased in April owing to route

adjustment by the shipping companies. As a result, the container throughput in Shanghai Pudong Terminal decreased

further to -14.3% year-on-year (corresponding period of 2008: -3.1%) during the first half of 2009, similar to that of

Shanghai Port.

The total throughput in Pearl River Delta and Southeast Coast reached 5,902,435 TEUs (corresponding period of 2008:

6,760,413 TEUs), a decrease of 12.7% year-on-year (corresponding period of 2008: +21.0%), accounting for 29.2% of

the total throughput. Jinjiang Pacific Terminal, which commenced operation in April 2008, drove the container throughput

and break-bulk cargo throughput in Southeast Coast to rise by 6.8% (corresponding period of 2008: +38.5%) and 89.7%

(corresponding period of 2008: +71.7%) respectively over the same period of last year, reaching 569,504 TEUs

(corresponding period of 2008: 533,248 TEUs) and 1,374,241 tons (corresponding period of 2008: 724,385 tons)

respectively. During the period, the increase in marble and granite imports handled by Quan Zhou Pacific Terminal and the

steady increase in break-bulk cargo throughput handled by Jinjiang Pacific Terminal boosted the total break-bulk cargo

throughput of the Group and Southeast Coast. The throughput in Pearl River Delta reached 5,332,931 TEUs

(corresponding period of 2008: 6,227,165 TEUs), a decrease of 14.4% year-on-year (corresponding period of 2008:

+19.7%). The container throughput of COSCO-HIT Terminal declined by 25.6% year-on-year (corresponding period of

2008: -2.5%) due to exports to Europe and the United States accounted for a higher proportion of containers handled.

The container throughput of Yantian Terminal decreased by 11.1% over the same period of last year (corresponding

period of 2008: +2.4%), representing a significantly better performance over Shenzhen Port of -21.1%. Its market share

in Shenzhen Port increased to 46.9% (corresponding period of 2008: 41.9%).

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